WASHINGTON — Wednesday’s proposal by the Biden administration to ease student loans included a rule that would reduce interest rates for almost all of the over 40 million borrowers in America.
The Department of Education stated in a statement that it would remove interest capitalization from areas where it is not required by law. This means that any unpaid interest will not be added to the total debt of the borrower.
This proposal reverses a Trump Administration restriction and aims to make it easier to forgive student debts that were incurred at for-profit colleges.
The proposal also aims to improve the Public Service Loan Forgiveness program, which is currently in trouble. It allows more types of payments to count towards debt forgiveness, including late or partial payments. Public service workers will also be credited for the time their loans were deferred to serve in AmeriCorps, the Peace Corps and the National Guard, according to the new proposal.
“We are committed in fixing the broken system. “If a borrower is eligible for student loan relief it shouldn’t require mountains of paperwork or a law-degree to get it,” Secretary Miguel Cardona stated in a statement.
These proposed changes will make it easier to file for debt relief for persons with disabilities by streamlining the process, and expanding the number of qualifying disabilities. This plan will provide debt relief for borrowers who are enrolled in colleges that close during their enrollment.
The Department of Education stated that it expected to have the rules in place by November 1, so that the rule could be effective by July 2023.
As progressive Democrats press for more aggressive action, President Joe Biden is still trying to figure out how to cancel student loans. Although the White House indicated that Biden was open to cancelling $10,000 of student loans for borrowers with a certain income level, the high inflation rate in the United States has made the matter more complicated.
